Today various global or local communications networks (the Internet, the World Wide Web, local area networks and the like) offer a user a vast amount of information, hosted on the different resources.
Generally speaking, a given user may access a resource on a communication network by two principle means. The given user can access a particular resource directly, either by typing an address of the resource (typically an URL or Universal Resource Locator, such as www.webpage.com) or by clicking a link in an e-mail or in another web resource.
Alternatively, the given user may conduct a search using a search engine to locate a resource of interest. The latter is particularly suitable in those circumstances, where the given user knows a topic of interest, but does not know the exact address of the resource the user is interested in.
Many search engines are available for the user. Some of them are considered to be general purpose search engines (such as Yandex™, Google™, Yahoo™ and the like). Others are considered to be vertical search engines—i.e. search engines dedicated to a particular topic of search—such as Momondo™ search engine dedicated to searching flights.
Majority of search engines includes advertisements (ads), placed on search engine results pages SERP or presented via other objects (such as web-sites) for paid publications. Generally, an advertiser pays for an amount of transfers to his ad, performed by users (so-called pay-per-click). To determine an amount of the payment-per-click for different ads all major search engines use ad auctions.
Advertisers enter ad text, keywords and bids into an ad management system. When a user sends a query to the search engine, the system finds a set of ads with keywords that match or substantially match the query and determines which ad(s) should be displayed and where exactly. When the search results and ads are displayed, the user may click on an ad for further information. In this case, the advertiser pays the search engine an amount determined by the bids of the other competing advertisers. The expected revenue received by the search engine is the price per click (also called cost-per-click (CPC) or cost-per-action (CPA)) times the expected number of clicks (may be expressed in a click-through-rate (CTR) parameter).
In general, the search engine would like to sell the most prominent positions—those most likely to receive clicks—to those ads that have the highest expected revenue. To accomplish this, the ads are ranked by bid multiplied by click through rates and those ads with the highest expected revenue are shown in the most prominent positions.
Sometimes the highest bidder is required to pay not the highest bid amount but the second highest bid made by the second highest bidder. This type of auction is called the Second Price Auction, as opposed to the First Price Auction where the winner pays the highest bid amount. Thus in order for the ad to be shown at the top and best slot the highest bidding advertiser pays the second highest price, which is lower than the highest bid amount. The discounted price payed by the winner of the auction is referred to as “reserve price”.
Known solutions that contemplate that the reserve price to be determined as a function of an advertiser's bid or as a history of bids of the advertiser are believed to be flawed as they allow advertisers to negatively influence the market and intentionally decrease the reserve price, thus forming bad market equilibrium states (also known as Nash equilibria).
US patent application US 2014/0006144, published 2 Jan. 2014 (Pardoe et al.) teaches systems and computer-implemented methods for calculating a suggested reserve price associated with an opportunity to realize an online advertisement. In some implementations, data associated with historical online advertisement auctions are clustered based on a reference opportunity for realizing an online advertisement, wherein each historical online advertisement auction of the cluster is associated with a first bid price of higher value and a second bid price of lower value; a dominance relationship between a distribution of the first bid prices of the cluster and a distribution of the second bid prices of the cluster is determined; a reserve price associated with the cluster based on the dominance relationship is calculated; and the reserve price is stored as a suggested reserve price to realize an online advertisement, wherein the suggested reserve price is associated with the reference opportunity that is associated with the cluster.
US patent application US 2014/0172587, published 19 Jun. 2014 (Somech et al.) teaches systems, methods, and computer storage media having computer-executable instructions embodied thereon that dynamically set floor prices in a second price auction for impressions or events. Advertiser bids for the impressions or events are received by the computer system and used to create a statistical distribution. The advertiser with the highest bid for an impression or event is identified. The statistical distribution excludes bids received from the advertiser having the highest bid. The computer system sets a floor price for the impression or event. The floor price is based on the statistical distribution. The advertiser is charged the maximum of the floor price or the second highest bid received from another advertiser for the same impression. The advertisement associated with the advertiser having the highest bid is selected for display in a webpage that corresponds to the impression or event.